Business Context and Reporting Period
Company: Asbury Automotive Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 25, 2019
Event: Entry into a Material Definitive Agreement (Third Amended and Restated Credit Agreement).
Key Financial Metrics and Debt Structure
This filing details the restructuring of the Company's senior credit facilities. The filing does not provide current revenue, profit, or cash flow figures, as it focuses on debt capacity and terms.
| Facility Type | Amount | Primary Use |
|---|---|---|
| Revolving Credit Facility | $250.0 million | Working capital and general corporate purposes |
| New Vehicle Revolving Floorplan Facility | $1,040.0 million | Financing purchase of new vehicles |
| Used Vehicle Revolving Floorplan Facility | $160.0 million | Financing purchase of used vehicles |
| Total Facility Capacity | $1,450.0 million |
Expansion Option: The Company may increase facility sizes by up to $350.0 million plus additional amounts, subject to a consolidated secured leverage ratio not exceeding 2.00 to 1.00.
Maturity Date: September 25, 2024.
Material Changes Versus Prior Period
The 2019 Senior Credit Facility amends and restates the Company's previous credit agreement dated July 25, 2016. Key changes include:
- Establishment of a new aggregate credit capacity of $1.45 billion across three distinct facilities.
- Implementation of variable interest rates based on LIBOR or Base Rate plus an Applicable Rate tied to the Company's consolidated total lease adjusted leverage ratio.
- Introduction of specific commitment fees for unused commitments ranging from 0.15% to 0.40% per year.
Guidance, Risks, and Covenants
Interest Rates:
- Revolving Credit Facility: LIBOR + 1.00% to 2.00% or Base Rate + 0.15% to 1.00% (post-certification).
- New Vehicle Floorplan: LIBOR + 1.10% or Base Rate + 0.10%.
- Used Vehicle Floorplan: LIBOR + 1.40% or Base Rate + 0.40%.
Covenants: The agreement requires compliance with a minimum consolidated current ratio, minimum consolidated fixed charge coverage ratio, and maximum consolidated total lease adjusted leverage ratio. Additional covenants may restrict the ability to incur debt, pay dividends, or acquire/dispose of assets.
Risks and Contingencies:
- Events of Default: Includes cross-defaults to other material indebtedness. A default in one facility could trigger a default in others, potentially requiring immediate repayment of all outstanding amounts.
- Collateral: Obligations are secured by liens on substantially all present and future assets (excluding real property) of the Company and guarantors.
Investor Verification Checklist
- Verify the Company's current consolidated total lease adjusted leverage ratio to determine applicable interest rate tiers.
- Review the specific definitions of "minimum consolidated current ratio" and "fixed charge coverage ratio" in the full Credit Agreement (Exhibit 10.1).
- Assess the impact of the cross-default provisions on the Company's other material indebtedness.
- Confirm the utilization levels of the new $1.45 billion facility versus the prior agreement.